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Who Authored Obamacare’s Exchanges? King v. Burwell and Justice Kagan’s Law Clerks

Despite all the media hubbub and intense scrutiny, we
didn’t learn all that much from the oral argument in King v. Burwell. The
four liberal justices—Ginsburg, Breyer, Sotomayor, and
Kagan—clearly believe that an exchange established
“for” or “in” a state by the federal
government is the same as an exchange “established by the
state” (or at least that it’s ambiguous and the tie
goes to the IRS). Justices Scalia and Alito—and presumably
the silent Thomas—equally believe that words mean what they
say.

While Justice Kagan’s
chambers may run like a well-oiled machine, Obamacare has been a
mess from the very beginning.

So the case, as expected, turns on the views of Chief Justice
Roberts and Justice Kennedy, who gave very little away. Indeed,
I’ve never seen John Roberts so quiet at an oral
argument—holding his cards so close that they risk being
permanently imprinted on his vest—while Anthony Kennedy was
characteristically inscrutable. In other words, 4-3 in the
government’s favor with two wild cards.

That’s exactly what everyone knew going into the argument,
and 85 minutes later if anyone tried to tell you that they knew
what the outcome would be, they were engaging in spin or wishful
thinking. To put an even finer point on it: whichever side you
thought had the better chance of winning, downgrade your
expectations to 50-50.

A Revealing Exchange

But getting beyond the prognostication—which is almost
always a futile exercise—there was one exchange that at least
illuminated what this case turns on. Not surprisingly, it came in a
colloquy between Justices Kagan and Alito (with the
petitioners’ counsel, Mike Carvin, acting as the foil). As
seasoned court-watchers know, those two justices are the ones to
focus on if you want to understand the crux of any matter before
the Court. They’re rarely the swing votes, but their
questioning is clear, incisive, and to the point.

Here’s Kagan’s initial question:

So I have three clerks, Mr. Carvin. Their names are Will and
Elizabeth and Amanda. Okay? So [to] my first clerk, I say, Will,
I’d like you to write me a memo. And I say, Elizabeth, I want
you to edit Will’s memo once he’s done. And then I say,
Amanda, listen, if Will is too busy to write the memo, I want you
to write such memo. Now, my question is: If Will is too busy to
write the memo and Amanda has to write such memo, should Elizabeth
edit the memo?

Carvin stylized this hypothetical a bit, positing that the
original plan was to pay Will for a memo and Amanda ends up writing
the memo, then “under plain English and common sense,”
Will doesn’t get paid (presumably regardless of whether
Elizabeth edits the memo). Justice Kagan cut him off before he
finished this explanation, saying:

Gosh … you run a different shop than I do … . Because in my
chambers, if Elizabeth did not edit the memo, Elizabeth would not
be performing her function. In other words, there’s a
substitute, and I’ve set up the substitute. And then
I’ve given instructions: Elizabeth, you … edit Will’s
memo, but of course if Amanda writes the memo, the instructions
carry over. Elizabeth knows what she’s supposed to do.
She’s supposed to edit Amanda’s memo, too.

Carvin again explained that the difference between Kagan’s
chambers and the case at hand was that the justice was
“agnostic” as to which of her clerks writes the memo,
while Congress “was not agnostic as to whether States or HHS
established the Exchange.” In other words, while Justice
Kagan doesn’t care who authors her memo (regardless of
whether Elizabeth edits it)—and might be willing to pay any
of her clerks if money were in play—the political dynamics
surrounding the passage of the Affordable Care Act indicate that
Congress very much wanted to have states “author”
exchanges.

At this point, Justice Alito cut to the chase:

Well, Mr. Carvin, if I had those clerks … and Amanda wrote the
memo, and I received it and I said, This is a great memo, who wrote
it? Would the answer be it was written by Will, because Amanda
stepped into Will’s shoes?

“That was my first answer,” Carvin quickly rejoined,
provoking the fourth transcript notation of
“(Laughter.)” during this interplay. “He’s
good,” Justice Kagan said with a smile, pointing to Justice
Alito.

Carvin then reiterated his point that “Congress was not
agnostic as between State and Federal exchanges.” Justice
Kagan agreed with this, suggesting that this conclusion meant that
the answer to her original question really depends on context
rather than “four or five words.” And that’s
absolutely true—one of the canons of statutory construction
is not to read a provision in a way that creates an absurd
result—but Justice Alito showed that it’s just as
nonsensical to say that the federal government established an
“exchange established by the state” as it is to say
that Will wrote the memo that Amanda wrote.

Reconciling Plain Meaning And A Reasonable Reading Of
Congressional Intent

So the only question here is whether reading the statute in the
way that makes grammatical sense produces absurd results: Is there
a reasonable explanation for why Congress would create a structure
that denies premium subsidies to people who buy health insurance
through federally run exchanges?

The answer to that is obvious: If Congress really wanted a
system where states set up exchanges—and, under well-settled
constitutional understandings, it couldn’t force them to do
so—it would have to provide an incentive. The incentive here
is the premium subsidy, which Obamacare’s designers
apparently felt was an offer no state would refuse.

That’s a very easy story to tell and understand, and
Congress has offered these sorts of carrots/sticks before (not
least with Obamacare’s Medicaid expansion, which the Court
rewrote three years ago to remove the unconstitutionally coercive
elements). Is that what really happened here?

There’s no dispositive evidence going either way—and
really can’t be, given that Congress had to pass the law to
find out what was in it—though ACA “architect”
Jonathan Gruber’s infamous videos do suggest that at least
the idea wasn’t foreign to the staffers who crafted the
legislation behind closed doors.

But the point is that it’s a perfectly plausible
contextual explanation, which means that there’s no need to
depart from the plain text of the law and somehow decree that
Amanda’s memo was written “by” Willa federal
exchange was established “by” the state.

In short, the fact that enforcing the Affordable Care Act
produces a result that Congress may very well have intended but
which has certain negative consequences is no reason to abandon the
rule of law and allow the IRS to rewrite the statute. While Justice
Kagan’s chambers may run like a well-oiled machine, Obamacare
has been a mess from the very beginning. Roberts and Kennedy should
enforce the law as written and thereby direct Congress to write
better memos.